Founder and former CEO of failed crypto exchange FTX appears in court as he faces US charges of defrauding investors
FTX founder Sam Bankman-Fried finally appeared in a hot magistrates’ courtroom in Nassau, the capital of the Bahamas.
A Bahamian judge denied Sam Bankman-Fried bail on Tuesday, after he had been arrested on Monday evening when US prosecutors accused the 30-year-old of misappropriating billions of dollars and defrauding investors.
Chief magistrate JoyAnn Ferguson-Pratt cited a “great” flight risk for refusing Bankman-Fried’s request for bail, and ruled he should be remanded to a Bahamas correctional facility until 8 February 2023.
The former CEO of the collapsed cryptocurrency exchange, dressed in a blue suit without a tie, then lowered his head and hugged his parents, who are both Stanford Law professors, CNBC reported.
Bankman-Fried told the court room that he did not waive his right against extradition to the US, and his legal team is planning to fight any extradition order.
Meanwhile according to Reuters, FTX’s legal team on Wednesday is fighting a demand for internal records from an insolvent affiliate based in the Bahamas.
In Wednesday’s emergency hearing, liquidators of FTX’s Bahamian business will ask US Bankruptcy Judge John Dorsey to give them access to the US unit’s Slack, Google and Amazon Web Services accounts and data.
However lawyers for FTX asked Dorsey to deny the request.
According to Reuters, they argued that Bahamian regulators had worked with FTX’s founder Sam Bankman-Fried, to undermine the US bankruptcy case and withdraw assets to the detriment of some creditors.
SEC, DoJ charges
The US financial regulator, the Securities and Exchanges Commission (SEC) announced its official charges against Sam Bankman-Fried on Tuesday.
The federal agency alleged that the defendant concealed his diversion of FTX customers’ funds to crypto trading firm Alameda Research, while raising more than $1.8 billion from investors, including approximately $1.1 billion from approximately 90 US-based investors.
The complaint further alleges that Bankman-Fried used commingled FTX customers’ funds at Alameda to make undisclosed venture investments, lavish real estate purchases, and large political donations.
Later in the day, separate charges were announced by the US Attorney’s Office for the Southern District for New York.
At a news conference on Tuesday, Damian Williams, the US Attorney for the Southern District of New York, described the fraud Bankman-Fried is accused of as among the largest in US history.
Bankman-Fried has been charged by the DoJ with conspiracy to commit wire fraud, wire fraud, conspiracy to commit commodities fraud, conspiracy to commit securities fraud, conspiracy to commit money laundering, and conspiracy to defraud the Federal Election Commission and commit campaign finance violations.
“One month ago, FTX collapsed, causing billions of dollars in losses to its customers, lenders, and investors,” said US Attorney Damian Williams. “Now, a federal grand jury in New York has indicted the former founder and chief executive officer of FTX and charged him with crimes related to the phenomenal downfall of that one-time cryptocurrency exchange, including fraud on customers, investors, lenders, and our campaign finance system.”
“As today’s charges make clear, this was not a case of mismanagement or poor oversight, but of intentional fraud, plain and simple,” said Williams.
Bankman-Fried has previously apologized to customers and acknowledged oversight failings at FTX, but said he does not personally think he has any criminal liability.
But his current position is a spectacular fall from grace, and only a year ago Forbes had pegged his net worth a year ago at $26.5 billion.
Bankman-Fried now faces up to 115 years in prison if convicted on all eight counts, although any sentence would depend on a range of factors.